Meryl Streep’s eery reincarnation of Margaret
Thatcher in “The Iron Lady” brings to mind Thatcher’s most famous quip,
“there is no such thing as ‘society.’” None of the dwindling herd of
Republican candidates has quoted her yet but they might as well
considering their unremitting bashing of everything public.
What defines a society is a set of mutual benefits and duties
embodied most visibly in public institutions — public schools, public
libraries, public transportation, public hospitals, public parks, public
museums, public recreation, public universities, and so on.
Public institutions are supported by all taxpayers, and are available
to all. If the tax system is progressive, those who better off (and
who, presumably, have benefitted from many of these same public
institutions) help pay for everyone else.
“Privatize” means pay-for-it-yourself. The practical consequence of
this in an economy whose wealth and income are now more concentrated
than any time in 90 years is to make high-quality public goods available
to fewer and fewer.
Much of what’s called “public” is increasingly a private good paid
for by users — ever-higher tolls on public highways and public bridges,
higher tuitions at so-called public universities, higher admission fees
at public parks and public museums.
Much of the rest of what’s considered “public” has become so shoddy
that those who can afford to find private alternatives. As public
schools deteriorate, the upper-middle class and wealthy send their kids
to private ones. As public pools and playgrounds decay, they buy
memberships in private tennis and swimming clubs. As public hospitals
decline, they pay premium rates for private care.
Gated communities and office parks now come with their own manicured
lawns and walkways, security guards, and backup power systems.
Why the decline of public institutions? The financial squeeze on
government at all levels since 2008 explains only part of it. The slide
really started more than three decades ago with so-called “tax revolts”
by a middle class whose earnings had stopped advancing even though the
economy continued to grow. Most families still wanted good public
services and institutions but could no longer afford the tab.
From that time onward, almost all the gains from growth have gone to
the top. But as the upper middle class and the rich began shifting to
private institutions, they withdrew political support for public ones.
In consequence, their marginal tax rates dropped — setting off a vicious
cycle of diminishing revenues and deteriorating quality, spurring more
flight from public institutions. Tax revenues from corporations also
dropped as big companies went global — keeping their profits overseas
and their tax bills to a minimum.
But that’s not the whole story. America no longer values public goods as we did before.
The great expansion of public institutions in America began in the
early years of 20th century when progressive reformers championed the
idea that we all benefit from public goods. Excellent schools, roads,
parks, playgrounds, and transit systems would knit the new industrial
society together, create better citizens, and generate widespread
prosperity. Education, for example, was less a personal investment than a
public good — improving the entire community and ultimately the
In subsequent decades — through the Great Depression, World War II,
and the Cold War — this logic was expanded upon. Strong public
institutions were seen as bulwarks against, in turn, mass poverty,
fascism, and then communism. The public good was palpable: We were very
much a society bound together by mutual needs and common threats. (It
was no coincidence that the greatest extensions of higher education
after World War II were the GI Bill and the National Defense Education
Act, and the largest public works project in history called the National
Defense Interstate Highway Act.)
But in a post-Cold War America distended by global capital, distorted
by concentrated income and wealth, undermined by unlimited campaign
donations, and rocked by a wave of new immigrants easily cast by
demagogues as “them,” the notion of the public good has faded. Not even
Democrats any longer use the phrase “the public good.” Public goods are
now, at best, “public investments.” Public institutions have morphed
into “public-private partnerships;” or, for Republicans, simply
Mitt Romney’s speaks derisively of what he terms the Democrats’
“entitlement” society in contrast to his “opportunity” society. At least
he still envisions a society. But he hasn’t explained how ordinary
Americans will be able to take advantage of good opportunities without
good public schools, affordable higher education, good roads, and
adequate health care.
His “entitlements” are mostly a mirage anyway. Medicare is the only
entitlement growing faster than the GDP but that’s because the costs of
health care are growing faster than the economy, and any attempt to turn
Medicare into a voucher — without either raising the voucher in tandem
with those costs or somehow taming them — will just reduce the
elderly’s access to health care. Social Security, for its part, hasn’t
contributed to the budget deficit; it’s had surpluses for years.
Other safety nets are in tatters. Unemployment insurance reaches just
40 percent of the jobless these days (largely because eligibility
requires having had a steady full-time job for a number of years rather
than, as with most people, a string of jobs or part-time work).
What could Mitt be talking about? Outside of defense, domestic
discretionary spending is down sharply as a percent of the economy. Add
in declines in state and local spending, and total public spending on
education, infrastructure, and basic research has dropped from 12
percent of GDP in the 1970s to less than 3 percent by 2011.
Only in one respect is Romney right. America has created a whopping
entitlement for the biggest Wall Street banks and their top executives —
who, unlike most of the rest of us, are no longer allowed to fail. They
can also borrow from the Fed at almost no cost, then lend the money out
at 3 to 6 percent.
All told, Wall Street’s entitlement is the biggest offered by the
federal government, even though it doesn’t show up in the budget. And
it’s not even a public good. It’s just private gain.
We’re losing public goods available to all, supported by the tax
payments of all and especially the better off. In its place we have
private goods available to the very rich, supported by the rest of us.
Even Lady Thatcher would have been appalled.
Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He writes a blog at www.robertreich.org. His most recent book is Aftershock.